Nearly every living former chair of the White House Council of Economic Advisers is urging President Donald Trump not to impose new steel import curbs in the name of national security, in a letter to be sent to the White House on Wednesday.
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The Trump administration has been examining the use of steel tariffs, duties or quotas under Section 232 of a 1962 trade law that gives presidents the power to block imports that are determined to threaten national security. The White House had been prepared to review options for implementing the law by the end of June, with action expected soon.
Signatories include every living former CEA chair except for Janet Yellen, who is chairwoman of the Federal Reserve and wasn't asked to participate. In the letter, some 15 economists who advised past presidents of both parties warn that tariffs "would likely do harm" to U.S. relations with major allies that are top sources of steel imports, including Canada, Brazil, South Korea and Mexico.
"The diplomatic costs might be worth it if the tariffs generated economic benefits. But they would not," the economists write. "Additional steel tariffs would actually damage the U.S. economy."
The letter also notes that the U.S. maintains more than 150 countervailing and antidumping duties on steel imports, including some as high as 266%.
The national security justification for trade enforcement actions has been studied 26 times by previous administrations but invoked only twice. The George W. Bush administration launched a Section 232 investigation in 2001 but rejected the security rationale for imposing duties on steel imports. Mr. Bush implemented steel tariffs using other emergency authorities in 2002 -- as part of a trade-enforcement push to secure broader political support for his free-trade agenda -- but lifted them the following year to avoid retaliatory measures from trading partners.
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The letter cites the emergency steel tariffs imposed by the Bush administration in underscoring the economists' concerns. Those tariffs did little to boost manufacturing employment and raised costs for consumers and businesses, the economists said.
The signatories include every CEA chair in that administration, including former Fed Chairman Ben Bernanke. Other signatories include Martin Feldstein, who was chair of the CEA under President Ronald Reagan, and Alan Greenspan, who held the post for President Gerald Ford. It also includes Nobel laureate Joseph Stiglitz, an adviser to President Bill Clinton.
Mr. Trump's nominee for CEA chair, economist Kevin Hassett, is awaiting Senate confirmation. The CEA is established by law and for decades has provided the president with economic advice and analysis. It also serves as a liaison between the White House and the agencies that produce economic data.
The letter was organized by the American Action Forum, a conservative think tank that published a separate report this week opposing the steel tariffs.
Some Trump administration officials have said the U.S. should take stronger action to curb steel imports, particularly against China, whose steel overcapacity they say could lead to dumping in other markets that are later imported to the U.S.
Others have warned that such a move could have repercussions on other U.S. markets because the U.S. is a net importer of steel, and that it could trigger retaliatory duties from major trading partners.
White House officials said Mr. Trump had planned to use the forthcoming report from the Commerce Department to press for greater action to curb steel overcapacity at last week's Group of 20 nations' summit in Hamburg, Germany.
"We ask the G-20 economies to join us in this effort and to take concrete actions to solve these problems," National Economic Council Director Gary Cohn told reporters before the trip. "But let us be clear: We will act to ensure a level playing field for all."
Mr. Trump told the G-20 leaders in a closed-door meeting they were "largely responsible" for the U.S.'s trade deficit, according to an official.
China alone is responsible for about two-thirds of the U.S. trade deficit. European Union leaders bluntly warned the president that they would retaliate against protectionist measures from Washington.
(END) Dow Jones Newswires
July 12, 2017 07:14 ET (11:14 GMT)